WASHINGTON–Exemptions from federal antitrust laws, such as the one enjoyed by the insurance industry, should be reviewed and, if continued, should be kept as narrow as possible, leaders of the Antitrust Modernization Commission told lawmakers here last week.
At a hearing of the House Judiciary Committee's Antitrust Task Force, AMC chair Deborah Garza told lawmakers that federal antitrust laws "have served our nation for over 100 years," and that they are a model for other countries. The AMC was charged with compiling a report on the potential for modernization of antitrust laws, and that report was submitted to Congress and the Bush Administration last month. In general, Ms. Garza said, "the report is an endorsement of free market principles."
While the conversation in the hearing did not touch specifically on the McCarran-Ferguson Act or the limited antitrust exemption it provides for the insurance industry, Ms. Garza noted in testimony submitted along with co-chair Jonathan Yarowsky that Congress is currently considering a potential repeal of several exemptions or immunities from antitrust laws, and the McCarran-Ferguson exemption is among those.
"The Commission strongly encourages such a review," the two said in testimony.
In general, they said, immunities should "rarely, if ever," be granted, and then only when there is either compelling evidence that competition cannot achieve a goal that trumps consumer welfare or a market failure that "clearly requires government regulation in favor of competition."
Ms. Garza said that when dealing with representatives from other countries, many of their questions revolve around the issue of exemptions and why some practices are allowed over others. While she did not comment on the insurance industry, she noted that the United States is the last developed nation in the world to maintain an exemption for international shipping conferences.
Ms. Garza told members of the committee that the commission did not wish to address any industry-specific provisions in its report.
"Rather than attack specific immunities and exemptions, we decided to offer you a framework," she said.
When Congress does establish immunity or exemption from antitrust laws, the two said it should be limited and contain a sunset provision. They added that the Federal Trade Commission or Department of Justice should investigate and report on its effectiveness prior to any renewal.
Rep. John Conyers, D-Mich., chairman of the Judiciary Committee, praised the commission for its work, calling the recommendation that immunities or exemptions be disfavored an "interesting recommendation" and "something that is worth celebrating."
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